CIIG Diploma common mistakes
CIIG Diploma · Understand the traps and how to avoid them.
When asked to identify who bears a loss, candidates name the party who physically suffered it (the policyholder or claimant) rather than tracing the legal incidence of risk through the contract, and they treat 'risk' as synonymous with 'peril'.
Everyday usage of 'risk' means danger or hazard, so candidates default to listing perils (fire, theft, flood) when the question asks about risk transfer, retention or the burden of an uninsured loss. The distinction between risk (uncertainty of outcome), peril (cause of loss) and hazard (condition increasing the chance or severity) is learned early and then blurred under time pressure.
What to do instead
Before answering, write the three definitions in the margin and label each element of the scenario against them. For loss-incidence questions, draw a simple chain: who held the economic exposure before the contract, what the contract transferred, and who holds it after. Practise with short scenarios where the insured retains a deductible or coinsurance share, so the answer is never simply 'the insurer'.
Candidates answer liability questions by asserting that a breach of a statutory or regulatory duty automatically gives the affected customer a private right of action for damages, without checking whether the statute creates such a remedy or whether the regulator's sanction is the only consequence.
Regulatory rules and civil duties are studied in the same domain and both are described as 'obligations', so candidates collapse them. The exam often describes a conduct failure and asks what remedy follows; the instinct is to award compensation because that feels like the fair outcome, rather than analysing the legal route (contract, negligence, statute, or ombudsman scheme).
What to do instead
For each regulatory provision you revise, record separately: who enforces it, what sanction they can impose, and whether the customer has an independent civil claim. When a question asks about remedies, list the possible routes explicitly (breach of contract, tort of negligence, statutory remedy, dispute-resolution scheme) and eliminate those not supported by the facts before choosing.
When assessing a submission, candidates focus on the physical hazard (occupancy, construction, housekeeping) and overlook moral and morale hazard signals such as a recent surge in sum insured, a history of small frequent claims, or a change in business model, so they recommend acceptance at standard terms.
Textbook underwriting is taught through physical risk features because they are easy to tabulate, and case studies in revision notes tend to emphasise fire and flood. Moral hazard requires inferring intent from behaviour patterns, which is harder to spot in a short scenario and is easily missed when the candidate is racing to produce a recommendation.
What to do instead
Adopt a fixed checklist for every underwriting scenario: physical, moral, morale, and financial (sum insured adequacy, claims history, turnover trend). Force yourself to write at least one line under each heading before forming a view. Where a signal is present, state the underwriting action it justifies (declinature, excess, exclusion, survey, warranty) rather than only naming the hazard.
Candidates treat notification of a claim as acceptance of liability, and advise that the insurer must pay once the claim is notified and the loss adjuster has visited, skipping the separate steps of coverage verification, causation, quantum and subrogation potential.
In practice the claims journey is often described as a single narrative ('claim received, adjuster appointed, claim settled'), and revision material compresses the stages. Candidates then conflate the duty to handle promptly with an admission of indemnity, and they miss questions that turn on a policy condition or exclusion discovered during investigation.
What to do instead
Memorise the claims sequence as discrete gates: notification and reservation of rights, coverage analysis against the policy wording, causation and proximate cause, quantum and betterment/salvage, then recovery and closure. In any claims scenario, answer by walking the gates in order and stating what evidence is needed at each. Practise spotting the moment where an apparent admission of liability must be corrected.
When calculating solvency or capital adequacy, candidates use gross written premium or total assets as the measure of financial strength, and they confuse the solvency margin with the accounting profit for the year.
Profit, premium and capital are all 'money the insurer has', and the technical reserves and admissible-asset rules that convert balance-sheet items into a regulatory solvency figure are abstract. Under exam conditions candidates reach for the most familiar number rather than the one the regulator uses.
What to do instead
Build a one-page map of the solvency calculation: eligible capital resources on one side, capital requirement on the other, and the ratio between them. Learn which assets are inadmissible and why. Then work three numerical examples where premium grows faster than capital and explain the effect on the ratio, so the mechanics become concrete rather than definitional.
Candidates describe straight-through processing, data enrichment or automated decisioning as unqualified benefits, and fail to identify the control failures they introduce, such as unmonitored pricing models, poor data quality driving wrong decisions, or no audit trail for a declined risk.
Technology questions invite a list of advantages because that is how the topic is usually introduced. Governance, model validation and auditability are covered later and feel like compliance add-ons, so they are omitted when the question asks for risks or controls.
What to do instead
For any technology scenario, answer in two columns: efficiency gain and the control that must accompany it. Prepare a standard set of controls (data quality checks, model validation and monitoring, human override, audit logging, outsourcing oversight, cyber resilience) and apply at least three to every scenario, naming the specific failure each control prevents.
Candidates answer treating-customers-fairly questions by describing good intentions and courteous service, rather than identifying the specific outcome, the vulnerable-customer indicator in the scenario, and the evidential record the firm must keep.
Fair treatment is intuitively about politeness, so candidates write about communication style and empathy. The regulatory expectation is about outcomes and evidence, and about recognising characteristics of vulnerability (health, life events, resilience, capability) that change what fair treatment requires in that case.
What to do instead
Rewrite your revision notes around outcomes, not attitudes: products that meet needs, fair price and value, clear information at the right time, suitable advice, and no unreasonable post-sale barriers. For every scenario, name the vulnerability indicator, the adjusted process it triggers, and the record that would demonstrate the outcome to a reviewer.
When asked to recommend strategy, candidates list generic actions (improve customer service, invest in technology, expand into new markets) without linking them to the insurer's specific competitive position, capital constraints or underwriting appetite, and without stating how success would be measured.
Strategy questions are open-ended and reward structure, so candidates produce broad suggestions that cannot be wrong but also cannot score. The case facts that should drive the recommendation (combined ratio trend, distribution mix, reinsurance dependence) are read as background rather than as constraints.
What to do instead
Before writing, extract three facts from the scenario and treat them as constraints. Frame the answer as position, options, choice, implementation, measure. Every recommendation must name the constraint it addresses and one metric that would show it worked. Discard any action that could be pasted into another company's answer unchanged.
Candidates confuse indemnity with the sum insured, arguing that a policy pays the full sum insured on any loss, or conversely that the insurer can never pay more than the market value at inception regardless of the basis of settlement stated in the policy.
The sum insured is the most visible number in a policy schedule, so it is treated as the amount payable. The principle of indemnity, the basis of settlement clause, average and reinstatement memory are separate concepts that interact, and candidates learn them in isolation without practising the arithmetic.
What to do instead
Work numerical examples for each basis of settlement (indemnity, reinstatement, agreed value) and for underinsurance with an average condition, showing the calculation line by line. Then state in one sentence what each concept does: indemnity restores the insured to pre-loss position, the sum insured is a limit, average reduces the claim for underinsurance. Apply all three to a single scenario until the distinctions are automatic.
Candidates describe the role of the intermediary or broker as merely passing the customer to the insurer, and fail to distinguish the duties owed to the customer from the duties owed to the insurer, particularly where the same firm acts for both or receives commission from the product provider.
Distribution is often revised as a process chart (customer, intermediary, insurer) rather than as a set of legal relationships. Conflict-of-interest questions then catch candidates out because they have not separated the agency relationship from the advisory relationship.
What to do instead
Draw the relationships explicitly: who is the agent of whom, who pays whom, and what must be disclosed. For each scenario, state the duty owed, to whom, and how a conflict is managed or disclosed. Test yourself with cases where the intermediary's recommendation benefits the insurer's margin, and identify the disclosure and suitability obligations that apply.